Beginner investors are very suitable for investing in money market mutual funds. One reason is because this type of investment has a low risk, so it is very suitable for novice investors.
Beginner investors usually avoid investments that have a high level of risk. This is because these investors are afraid that they will lose more than the invested capital and are afraid that they will not gain any profit at all.
Although the gains will be commensurate with the risks, this money market investment still has the potential to provide quite lucrative returns. Why is that? You will find the full answer below.
What are Money Market Mutual Funds?
Before discussing this money market investment further, you should first know what it means. Money market mutual funds are a type of mutual funds investment product where the funds invested by investors will be allocated in the money market instruments.
Simply put, money market mutual funds are the container used to accommodate funds from investors to be invested in the form of a portfolio that consists of money market instruments.
There are several examples of money market instruments that we often encounter, including Money Market Securities (SBPU), Bank Indonesia Certificates (SBI), and many other examples. This type of mutual fund product is directly managed by a professional financial manager or commonly known as an investment manager.
This investment manager will later allocate the funds that have been collected from investors to be further invested in the capital market or money market to generate profits for the investors.
How Money Market Mutual Funds Work
As we have learned, the money market mutual funds are defined as investments that allocate funds to the money market. So, the funds will be collected from investors and then managed by the investment manager.
Furthermore, the funds will be allocated by the investment manager to the money market. The effect of this investment are debts issued within a period of less than one year. This is done to maintain capital and liquidity.
This is one of the reasons why this investment is usually chosen for short-term investments. Because the invested funds can only work optimally if the investment is made in a fairly short period of time.
Characteristics of Money Market Mutual Funds
You need to know that mutual funds have various types of investment products, each of which has different characteristics. This also applies to money market investments from mutual funds. Here are some characteristics of this money market investment.
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Lower Risk
The first thing an investor should know when choosing a type of investment is the level of risk of the investment. This is intended so that investors are prepared for losses that may be obtained from the instrument’s level of risk.
This money market investment has a lower risk compared to other mutual fund products. However, the potential profits gained will also be proportional to the level of risk that may occur.
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Suitable for Short Term Investment
This money market investment can be suitable for investors who want short-term investments. This is because this investment has high liquidity so it has a flexible time period.
Investors can expect potential gain of up to 5-7 percent per year. So it is highly suitable for investors who want to try investing in the short term.
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Tax Free
Unlike fixed deposits, money market investments are not taxed. So the profits you gain from this investment will not be deducted by taxes. Thus, the returns you receive will be maximised.
Reasons for Beginner Investors to Choose Money Market Mutual Fund Investments
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Flexible Initial Capital with Relatively High Return
A novice investor usually prefers to invest with smaller capital because they are learning about the investment product they choose. Hence why the money market mutual funds can be suitable for novice investors.
These mutual funds allow flexibility in the initial capital. So it will be suitable for all types of investors from various backgrounds and experiences. Be it experienced investors or investors who are just starting to take their first steps of investment.
Regardless of your initial capital, money market mutual funds offer a potentially higher return than fixed deposits or savings. Usually, money in savings account is subject to administrative costs and does not grow.
It's different with investing in the money market, even though the return you will get is proportional to the risk, the money will continue to grow and benefit the investors.
To be able to maximise the profits of this investment, investors can invest as much as possible. The investment capital is directly proportional to the return to be obtained. So, the greater the capital invested, the greater the potential return you may gain.
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Easy Liquidation
Beginner investors are usually reluctant to start investing because they think that investment funds are difficult to cash in and the results cannot be enjoyed immediately. However, this will not happen if you use money market mutual funds.
Mutual funds have high liquidity, because that you can sell the product anytime. The higher the liquidity of an investment, the easier the process of disbursing funds can be.
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Professional Fund Management
The process of managing investment funds certainly cannot be done by just anyone and needs to be carried out by professionals in the field. Mutual funds are managed by professionals, so that investors' funds have been optimised.
Fund management in Mutual Funds is carried out directly by the investment manager. This will be very profitable for investors because the investment will run more optimally.
If the investment runs more optimally, the profits gained by investors will also be maximised. So, even if you are a novice investor, you will be supported by this investment manager because you will still get the maximum profit.
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More Stable
Before you choose an investment instrument, you must pay attention to its level of risk. Mutual funds have 3 categories of risk levels for each product, namely high, medium, and low risk.
The money market is included in the low risk level. This is because the fluctuations and changes in the price of the securities are lower. That way, the yields that will be obtained tend to be more stable among others.
Due to its more stable nature, this mutual fund can be the right choice for novice investors. Choosing the money market can also be a diversification step to minimize risk.
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Supervised by Financial Services Authority (OJK)
Currently, there are many investments that offer very tempting returns. Beginner investors will usually be very tempted by investment offers that promise a mountain of profits without paying attention to the security of the investment.
This is of course dangerous because not all of these investments can really provide benefits for investors. Especially if it is not registered and supervised directly by the OJK.
Money market mutual funds are investments that have guaranteed security because they have been registered with the Financial Services Authority or what we usually know as OJK. Thus, this Mutual Fund is legal and directly supervised by the OJK.
Although this does not eliminate the risk that you may get when investing. However, you will feel safer when investing with a party with clear authorization.
Trusted Money Market Mutual Fund Investment with DBS Treasures
Are you interested in Mutual Fund investment? But do not know where to invest that is safe and reliable. DBS Treasures is here to support your investment goals.
DBS Treasures is a priority banking with trusted security and credibility. Because, DBS Treasures has been registered and supervised directly by OJK. There are many advantages that you can get when investing with DBS Treasures. Here are some of the advantages.
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Funds Managed by Professional Investment Managers
The first advantage that investors will get when investing in mutual funds in DBS Treasures is that the management of funds will be directly carried out by investment manager partners who are professionals in this field.
Fund management at DBS Treasures will be carried out by professional investment managers who are trusted partners of DBS Treasures. Thus the investment process will run more optimally so that the funds invested by investors will develop and generate maximum profits.
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Guided by the Experts
You need to know that DBS Treasures has a dedicated team of financial experts who will share insights about your investment. This team consists of professionals who have been in the investment field for a long time.
Thus, if you invest in DBS Treasures you will get many new insights regarding the investment product you choose. In addition, you will also get information about the current investment trend opportunities. All this information is personalised and consistently communicated to you.
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Minimum Risk
Investments that have minimum risk with maximum profit are certainly highly targeted by investors. Although basically the risk of money market investment tends to be low, with DBS Treasures this risk can be further minimised by diversifying investments.
DBS Treasures will make it easier for investors in the diversification process because it has a comprehensive range of investment products. This diversification process is useful for reducing the level of risk that may occur. Thus, the easier the diversification process, the lower the possible risk level.
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Easy Transaction
Another advantage that will be enjoyed by investors is an easier transaction process. You can carry out various mutual funds investment transactions on the digibank by DBS Application, starting from the mutual funds analysis process supported by data from Invofesta for the convenience of selling, buying, switching transactions. Not only that, for new investors, you can register your SID (Single Investor Identity) issued by KSEI (Indonesian Central Securities Depository) through the digibank by DBS Application. You can also simply register your SID on this platform without switching to another platform.
How to Invest in Mutual Funds with DBS Treasures?
After knowing the numerous benefits that can be obtained from DBS Treasures, what’s the next step to start investing? To be able to start investing in mutual funds with DBS Treasures, it is quite easy.
You can start by registering as a priority client of DBS Treasures. Do not forget to prepare the minimum funds to meet the registration requirements. Now, you already have a great opportunity to generate profits from mutual fund investments.
After knowing the various information about investing in money market mutual funds above, you may begin your first step in investment. What are you waiting for? Let's invest in mutual funds with DBS Treasures now, and gain the various benefits.
